Time to buy gun shares?

Time to buy gun shares? CNBC says NO, and so do I.

While S&W (SWHC) sell a wide range of M&P branded AR-15s, Ruger (RGR) sells the Mini-14 / Mini-30 (and since recently high capacity Mini-14 magazines) and Olin Corp. (OLN, makers of Winchester branded ammo) is selling overprice ammo, along with everyone else, I suggest you stay away from all three.

So, why not Ruger and S&W? In 10 words … a gun sold today is a gun not sold tomorrow. There may be a mad rush to purchase evil semi-automatic rifles, handguns and “sniper” rifles today but in the long run, even if there is no AWB 2.0, sales will drop. If/when there is an AWB then sales will drop unless the manufactures manage to ensure the AR and Mini-xx family of rifles is are banned by name, and even then they will be competing with the pre-ban market.

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So why not Olin? Apart from my prediction yesterday that ammo prices will drop in 2010 or sooner, Olin does many other chemical related manufacturing, ammo is only part of the business, so betting that the stock price will go up based on ammo prices would be a mistake.

Share price (60 day moving average in red) over the past year. Charts from Yahoo Finance:

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Ruger

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Olin Corp.

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S&W



Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


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  • I agree. This current sales spurt won’t last into January because, by then, everyone will have all the assault weapons and high-cap magazines they want. In fact, future sales may be much lower than past years because there won’t be any demand any more.

  • So why not buy when it’s low?

    Ruger’s at $6. Sure I might lose some, but low is a good time to buy.

    Heck, my Netflix stock is really down, the whole market is down. But this is when the people who have money to buy, and buy the right stock make big.

    That said, one does have to determine the long-term viability of a company.

  • jdun

    Economic wise we’re going into a depression.

    Electing Obama was the worst thing that can happen to the world economy. The people that are responsible for the subprime mess is the ones that will be in power by next year.

    There are a lot of fear going around in the US stock market. Investors are moving their money to oversea island states so Obama won’t be able to steal their money.

    Just remember we’re not in a recession yet. It takes two negative quarters to call it a recession. We had one last quarter and almost 100% for the current quarter. The worst is yet to come. By a lot of guns and ammo because in a depression those dumbass that voted for Obama will have no job and no food.

    Anyway we bought over 5k of AR15 upper parts from YHM (Yankee Hill Machinery) and it took 3 months for it to arrive. Privately held companies are the one that making the most money.

  • DC

    Well Mockum … here it is almost March 2009 and guns and ammo sales haven’t even begun to show signs of slowing down. How now brown cow?
    My opinion…you cannot possibly go wrong investing in guns and ammo. Especially with “PEBO” in control of the White House now.